For depreciation purposes, a company can select either the 150% declining balance method or use the MACRS depreciation method with a 3-year recovery period. The light duty pick-up truck has a cost basis of $23,000 with a salvage value of $6,250 at the end of it’s 5 year useful life. If the company is trying to maximize the depreciation value claimed for tax purposes, at the end of year 2, which method should be selected?

Principles of Accounting Volume 1
19th Edition
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax
Chapter11: Long-term Assets
Section: Chapter Questions
Problem 13PA: Colquhoun International purchases a warehouse for $300,000. The best estimate of the salvage value...
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For depreciation purposes, a company can select either the 150% declining balance method or use the MACRS depreciation method with a 3-year recovery period. The light duty pick-up truck has a cost basis of $23,000 with a salvage value of $6,250 at the end of it’s 5 year useful life. If the company is trying to maximize the depreciation value claimed for tax purposes, at the end of year 2, which method should be selected?

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